Dow tops 9,000 as home sales rise for 3rd month this year

Photo by Amy Sancetta / Associated PressA 1949 Ford pickup truck sits in the barn of the Medhurst family in Bainbridge Twp., Ohio, on July 16. Helped by a lightened debt load, Ford Motor Co. posted a surprise second-quarter profit of $2.3 billion Thursday, following the worst loss in company history a year earlier. Shares rose 10 percent in morning trading. (Click on image to enlarge.)

By TIM PARADIS
and SARA LEPRO
Associated Press

NEW YORK - The Dow Jones industrials are back above 9,000 for the first time since the beginning of January.

Investors are snapping up stocks across the market Thursday, sending major indexes up about 2 percent, after a report showed existing home sales jumped for the third straight month.

A 3.6-percent increase in June home sales has investors excited that the hard-hit housing market might be improving. The National Association of Realtors said sales came in at 4.89 million last month, above the 4.84 million analysts had been expecting.

Ford Motor Co. surprised the market with a second-quarter profit of $2.3 billion due mainly to a huge gain for debt reduction, while drug maker Wyeth, cigarette maker Philip Morris International Inc. and candy maker Hershey Co. all raised their profit forecasts for the year.

Investors were able to look past a government report showing a bigger-than-expected rise in new jobless claims. The Labor Department said the number of new claims for unemployment benefits rose by 30,000 last week to 554,000, slightly above analysts' estimates. However, a Labor Department analyst said the report was distorted by the timing of auto plant shutdowns.

Also, total unemployment benefit rolls fell to the lowest level since mid-April.

After a month of wayward trading, stocks restarted the market's spring rally early last week after companies like Goldman Sachs Group Inc. and Intel Corp. got earnings season off to a good start with solid reports.

"Things are getting much better and the market is pricing it in," said Phil Orlando, chief equity market strategist at Federated Investors.

In midday trading, the Dow rose 174.20, or 2 percent, to 9,055.46. The blue chips last traded and closed above 9,000 on Jan. 6.

Advancing issues outnumbered decliners by about 6 to 1 on the New York Stock Exchange, where volume came to 491.8 million shares, compared to 414.6 million traded at the same point Wednesday.

A wave of merger-and-acquisition activity also supported the market. Bristol-Myers Squibb Co. said it plans to acquire Medarex Inc. for about $2.1 billion, the latest in a string of acquisitions by the drug maker. Medarex surged $7.47, or 89 percent, to $15.87, while Bristol-Myers rose 35 cents to $20.64.

Ford's profit was a huge improvement over the record $8.7 billion loss the company reported the same quarter a year earlier. Without one-time gains, the car maker would have lost $424 million, or 21 cents per share. That is still smaller than the loss of 50 cents per share analysts had been expecting. Ford rose 63 cents, or 9.9 percent, to $7.01.

Bond prices fell, pushing their yields higher, as money flowed back into the stock market and out of safe-haven investments. The yield on the benchmark 10-year Treasury note, which is closely tied to home mortgage rates, rose to 3.65 percent from 3.55 percent late Wednesday.

The dollar mostly fell against other major currencies, while gold prices dipped.

Oil prices rose $1.44 to $66.83 a barrel on the New York Mercantile Exchange.